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Members of a military transportation agency prepare to load gold bars into an armored vehicle for transport to the Central Bank Of Venezuela in Caracas, Venezuela. (Photographer: Manaure Quintero/Bloomberg)

U.K. Leaves Fate of Venezuela's Gold Up to the Bank of England

(Bloomberg) -- The U.K. government said it is up to the Bank of England to decide what to do with the “significant amount” of gold it is holding under contract for the embattled Venezuelan regime of Nicolas Maduro.

“This is a decision for the Bank of England, not for government,” Foreign Office Minister Alan Duncan told Parliament Monday during an urgent question on Venezuela. “It is they who have to make a decision on this, but no doubt they will take into account when they do so, that a large number of countries across the world are now questioning the legitimacy of Nicolas Maduro.”

The Bank of England holds about $1.2 billion worth of gold for Venezuela, a significant chunk of the $8 billion in foreign reserves held by the nation’s central bank. That’s put the British regulator at the center of the growing international opposition to Maduro’s government. U.S. officials are trying to steer Venezuela’s assets to National Assembly leader Juan Guaido to bolster his chances of taking power.

Retrieving the gold from the BOE has been a major priority for the Maduro regime for weeks. Back in mid-December, Calixto Ortega, the president of Venezuela’s central bank, led a delegation to London that sought to gain access to it, according to two people with knowledge of the matter.

But those talks were unsuccessful and communications between the two sides have broken down since. According to a person familiar with the matter, the BOE declined the withdrawal request after U.S. Secretary of State Michael Pompeo and National Security Adviser John Bolton lobbied their U.K. counterparts to help cut off the regime from its overseas assets.

The BOE has declined to comment on its handling of Venezuelan assets, saying only that it “provides banking services -- including gold custody services -- to a large number of customers” and “does not comment on any of those relationships.” It also “abides by all relevant legislation, including applicable financial sanctions.”

The BOE houses the world’s second-biggest gold vault after the New York Federal Reserve, storing more than 400,000 bars in its underground shelves.

The U.K. followed the U.S. and other countries last week in recognizing Guaido as the legitimate president of Venezuela. When asked if the government would consider further sanctions against Venezuelan individuals including the military, Duncan answered it would consult with international partners “on how to approach the issue.”